The Kerala Budget 2025-26, presented by Finance Minister KN Balagopal in the Kerala Assembly on Friday, has identified startups and entrepreneurship as key focus areas to drive the state’s economic growth, aligning with international sustainable governance practices. The government aims to position Kerala as a leading startup hub in India.

Financial support and loan schemes
According to the Finance Minister, the Kerala Financial Corporation (KFC) has introduced various initiatives to support startups at all stages of growth. Startups can now avail of loans up to Rs 15 crore, up from the current Rs 10 crore, through venture debt and purchase orders with minimal security requirements. So far, the minister added that a total of Rs 82 crore has been provided to 7,079 startups, creating approximately 540 direct and 850 indirect jobs.

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Key budget allocations
1. Rs 9 crore for the Chief Minister’s Special Assistance Scheme to empower MSMEs and startups.
2. Rs 10 crore to the Fund of Funds under Kerala Startup Mission.
3. Rs 5 crore for ongoing activities of the Emerging Technology Hub under Kerala Startup Mission.
4. Rs 90.52 crore for Kerala Startup Mission (KSUM), covering Rs 20 crore for the Technology Innovation Zone in Kochi and Rs 70.52 crore for Youth Entrepreneurship Development Programs

5. Loans up to Rs 10 crore at a 6% interest rate, with a 3% government interest subsidy, under the Agriculture-Oriented MSME Loan Scheme (KAMS) to promote agri-linked industries and agro startups.

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6. Rs 80 crore allocated for the Entrepreneur Support Scheme, offering startup investment and technical support.

New initiatives for innovation and expansion
1. Agentic Hackathon: A national-level hackathon to develop AI-driven solutions, with Rs 1 crore allocated. Five selected ideas will receive Rs 20 lakh each.
2. Expand Your Office (EYO): MSMEs and startups can avail loans up to Rs 10 crore at 5% interest to establish coworking spaces, provided they generate over 100 jobs and have been operational for at least three years. Rs 10 crore has been earmarked for interest subvention.

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3. Freedom Square: Rs 2 crore allocated to set up interdisciplinary innovation centres in all 14 districts, fostering collaboration between college-based Innovation and Entrepreneurship Development Centers.
4. Fintech Growth Model: Rs 10 crore has been designated to support fintech startups that utilise AI, blockchain, IoT, and cloud computing. Major financial institutions such as KSFE and KFC will participate in these initiatives.

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